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Velocity Accelerators®: Business Process Improvement

An overwhelming portion of SAI Consulting’s work, in and out of homebuilding, has been about enabling clients to structure themselves around their core-critical business processes; Business Process Improvement is the area of our practice for which we are most recognized.

It is a similarly important area for Continuum Advisory Group, the consulting firm that joins SAI in the facilitation of open, sponsored Pipeline workshops™ and seminars™.

There is a good reason for our firms’ collective focus on improving (and managing) business processes, and it is simply this:

It is the most basic, most fundamental proposition in all of business: the reason an enterprise exists – every business enterprise, certainly every homebuilding enterprise – is to make money; the way an enterprise makes money is by delivering value to its customers and other stakeholders; that value can only be delivered through the work that the enterprise performs; that work has to be performed in some manner of workflow; the most common form of that workflow is work performed in processes.

Make money . . . by delivering value . . . through the work you perform . . . in processes.

From a business standpoint, processes are critically, centrally important; they exist – they matter – whether homebuilders are intentional about them or not.

How important is Business Process Improvement to a homebuilding company? Important enough that we sacrificed one of the highly-regarded Pipeline games™, so that we could elevate improvement of workflow to the level of a Velocity Accelerator®.

We always make the point that Pipeline workshops™ are about thriving on the velocity side of Return on Assets®, but better process workflow pays off on both sides of economic return; it drives higher margins and higher velocity, drives a higher Return on Sales as much as it drives higher Asset Turn.

And – this is why:

We don’t even consider Start-to-Completion – the sub-process of Prospect-to-Closing that is the aorta of workflow in a homebuilding company – to be process management; it is multi-project management with embedded and supporting processes, and all of the non-supervisory work is performed by external resources (trades and suppliers).

Since it is not managed like a process, we don’t map it.

Yet, the results from dozens of mapping engagements we have performed that don’t even consider Start-to-Completion show that 25% of all the work a homebuilding company performs – the work that consumes a building company’s overhead – is completely non-value-adding.

Here is the bottom-line:

If your Operating Expense represents – meaning it consumes – eight percent of Revenue, you are throwing away $20,000 of every $1,000,000 in income you generate.

The most visible element of BPI (and BPM) is the mapping of process workflows; process mapping involves far more than documenting the current workflow; it includes redesigning those workflows in ways that improve them, which invariably reveals other issues – root causes, core problems.

Which makes understanding and improving workflow the means to a much more important end.

Business Process Improvement is the tip of the spear, the front-end of a continuous improvement methodology in which the activities and elements of workflow that add value are preserved, the activities and elements that add no value are eliminated, and the remaining activities and elements that enable value are refined to make the workflow more clear, more consistent, more streamlined, more connected, more succinct, more fit for its intended, defined purpose.

The analogy from our Pipeline workshops™ is that we want a shorter, straighter pipe.

Because it is so foundational, it is impossible to overstate the importance of understanding and improving the way work is performed, before starting down the long road on other improvement initiatives, before the process of continuous improvement moves anywhere else.

In addition to being the means to a more important end, and the front-end of a process of continuous improvement, BPI ushers in a new perspective.

It shifts the organizational view away from the structure of work performed in functions. towards the flow of work performed in processes; BPI shifts the perspective from vertical to horizontal; it rotates a homebuilding enterprise 90 degrees from vertical, lays the enterprise on its side, and aligns its workflow with the value it seeks to create.

It’s about getting horizontal.

Lastly, processes are also one of the elements of the operating model that forms any strategic value discipline that serves to deliver exceptional levels of the specific and distinctive value demanded by a narrowly-defined segment of homebuyers.

Come. Participate. Learn.

Business Process Improvement is one of the five Velocity Accelerators® (along with Critical Chain Project Management, Epic Partnering™, Building Information Modeling, and Open-Book Management and Team-Based Performance Compensation) that will be explored at the next Pipeline workshop™, October 18-19, 2017, at the Ponte Vedra Inn and Club, in Ponte Vedra Beach, Florida.

Pipeline Workshops™

Pipeline Workshops™, sponsored by BUILDER and BuilderMT, are designed to transfer in-depth knowledge and create an intuitive, instinctive understanding of production principles and disciplines, focused specifically on homebuilding production management.